Lumentum Holdings Inc. - Common Stock (LITE)

Shares of Marvell were down big on Monday after it announced it would be acquiring Lumentum.

Marvell Technology agreed to acquire optical leader Lumentum. The market hates it.

Is Lumentum a bargain after today’s drop? It trades below Marvell’s offer, but there’s a catch.

Marvell said it has agreed to combine with Lumentum (NASDAQ:LITE), positioning the proposed transaction as a move to build a larger provider of optical connectivity technology for artificial-intelligence infrastructure. Marvell Chairman and CEO Matt Murphy said the combination would bring together

Lumentum is reporting increasing revenue growth as demand for its products accelerates.

Marvell is reportedly in advanced, all-stock talks to buy Lumentum for about $83 billion to expand in optical networking, sending Marvell shares down roughly 13%.

Artificial intelligence (AI) hyperscalers such as Alphabet, Amazon, Meta Platforms, and Microsoft are all investing in custom chips.

Marvell is reportedly close to a massive optics deal, but investors are worried about what it could cost existing shareholders.

Lumentum Holdings is likely to outperform expectations amid incredible demand for optical networking components.

One trades at a higher P/E, while the other looks like a bargain, but long-term growth sustainability is what counts.

Temperatures outside are dropping, but interest in this AI stock is heating up.